London hotels have defied the downturn

21st Oct 2009

The occupancy levels in London’s hotels has seen only a marginal decline compared to the rest of UK this year and the capital is resilient in the face of the slowdown in tourist numbers, according to figures released this week by Deloitte.

Hotels in the UK saw revPAR fall 10.9% in the first three quarters of 2009, to £60. Occupancy also dropped by 4% to 70.5%, despite a 7.2% fall in the average rate of a room to £85. London fared better, managing a decline in occupancy of only 0.2% to 80.4% between January and September, £10 off the average room rate and a drop in revPAR fell of 7.4% to £98.

Deloitte’s hospitality managing partner, Marvin Rust, has commended London’s performance, pointing out that achieving an 80% occupancy rate in these tough economic times has been an impressive feat, one that proves that London is indeed one of the most resilient cities worldwide.
“Leisure demand on the weekends has been particularly strong”, he added.

The strongest performing city in terms of revPAR, however, is Glasgow, down only 1.4%, with Edinburgh, Cardiff and Newcastle also holding up well. Hotels at Gatwick and Heathrow represent some of the largest declines, with revPAR falling 22%.

Hotels at Gatwick and Heathrow continue to experience some of the steepest declines across the UK, with revPAR falling 22% in each market. Less passenger traffic is suppressing demand for hotel nights and according to BAA, passenger traffic at Gatwick fell 8.9% year-to-August as a result of the open skies agreement. However, during the month of August, Gatwick grew its domestic and European traffic and this if sustained should have a positive knock on affect on hotel demand in due course. Heathrow’s passenger traffic dropped 2.6% year-to-August, but hotel performance has also waned due to the new room supply that entered into the market with the opening of Terminal 5 last year.

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Meanwhile, hotels in Reading are suffering the worst decline in revPAR down 24.9% to £41, with occupancy decreasing 16.7% to a humble 55.6% while average room rates dipped 9.9% to £74.
Marvin Rust added: “The number of overseas visitors to the UK were down 8% during the first seven months of the year, according to the Office for National Statistics. However, a surge in domestic tourism is counter-balancing this decline. So far this year, overseas departures by UK residents have decreased 16% as the appeal to holiday in the UK heightens. This has helped hotels to avoid the massive average room rate discounting that has taken place in other European countries.”